25/11/2009: Icap Launches Iron Ore Derivatives Broking Service

London, 13 May 2009 - ICAP plc (IAP.L), the world’s premier interdealer broker,
announced on Wednesday that it has launched a new broking service for global iron ore
derivatives, offering market participants the ability to offset risk exposures in one of the
world's leading base metal asset classes. The new service builds on ICAP’s existing
presence in both base and precious metals.


Major iron ore producers and steel makers have long had to rely on annual fixed price
contract negotiations, however the significant price swings and volatility observed in the
asset class over the past 18 months has highlighted the flaws governing the long term
contract system and the inflexibility it offers prudent risk managers from both the buy and
sell side. Consequently, an increasing number of physical market participants are
entering into swap agreements that provide both price certainty and flexibility in a capital
efficient manner.


ICAP will use its electronic capabilities to provide iron ore derivative price distribution
between Asia, Europe, and the Americas, providing global execution and research
services to a broad spectrum of market participants.
Commenting on the launch, Paul Newman, Managing Director of ICAP Energy Ltd. said
"ICAP has proven its ability to build derivative liquidity and transparency in emerging
asset classes, and we believe the physical transition being observed in today's iron ore
market offers interesting opportunities. By combining our voice broking expertise with
ICAP's global electronic footprint we are well placed to provide derivative trading
synergies between iron ore and our existing coal, freight, and base and precious metals
services."

Sean Mulhearn, Global Head of Commodity Sales, Standard Chartered, said "Iron ore
and steel remain two of the world's largest asset classes that until more recently have
remained absent of an efficient and flexible price hedging mechanism. Derivative
solutions in these asset classes will naturally compliment the likes of other well
established financial markets in base metals, energy and freight and will allow
companies the opportunity to manage these exposures."


Don McClumpha, Deputy CEO, ICAP Asia-Pacific, said "With a greater concentration of
physical iron ore trade being exposed to spot market volatility, and a global focus fixated
on seaborne trade in Asia, the region occupies a significant position in the future
development of the iron ore derivatives market. Combining ICAP’s existing voice broking
presence spanning eleven countries in the region with our technology will provide our
Asian based customers with a centralised liquidity pool that can leverage ICAP's global
connectivity to other market participants worldwide.”


ICAP is a world leader in the provision of commodity trading services including crude oil
and refined products, coal, electricity, emissions, carbon emissions, natural gas, and
weather derivatives. As a Category Two member of the London Metal Exchange, ICAP
also offers clients execution and clearing services in the wholesale base metals
marketplace. ICAP was also the first interdealer broker to provide electronic trading for
spot gold, silver, platinum, and palladium through its EBS platform.



 
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